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We spent the past few months in a range-bound trading environment which brought quick reversals and multiple sector rotations, confusing a large group of market participants and conditioning many traders to take their profits quickly. There are some signs that we might be entering a new trending market environment where more breakouts are likely to work and it will pay to hold to our winners longer.
We are finally starting to see breakouts in growth, story stocks that are following through. Look at the short squeeze in TSLA last week.
AMZN missed estimates, went down 10% in the after-hours session on Thursday, only to almost fully recover the next day. Dip buyers are firmly in charge. There is no more positive indicator of an improving market sentiment than a positive reaction to a weak number.
Granted, many software stocks are still in a downtrend and guilty until proven innocent but some of them are already starting to stabilize. For me, they remain strictly and intraday or swing trading vehicle. I don’t trust them as a longer-term holding just yet.
In other words, the indexes are just a few points away from a FOMO territory (fear of missing out).
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